RBA

One of the tenets of contemporary capitalism is that when it comes to capital, companies can’t be trusted -- that shareholders know better, especially when it comes to handling and investing the cash that companies generate. Shareholders should be continually rewarded through dividends and share buybacks -- it's called capital management and the mere mention of the phrase in a company’s statements (a special dividend or capital return) can send the shares higher, while a noted reluctance to engage in the process can send shares sharply lower in a matter of hours.

In Australia, we have the added drive of fully imputed dividends to make capital management even more appealing, and a $2.3 trillion pot of gold in our superannuation system. That makes for an attractive target for investment managers, analysts brokers, investment bankers, accountants and all sorts other fee merchants and coupon clippers -- along with the corporate executives whose remuneration is linked to share prices they can goose with a share buyback.